India splurged a record $55.7 billion on gold imports in 2021, buying more than double the previous year’s tonnage as a price drop favored retail buyers and pent-up demand emerged for weddings that were delayed when the pandemic first hit.
The 2021 gold import bill easily doubled the $22 billion spent in 2020 and surpassed the previous high, set in 2011, of $53.9 billion. In volume terms, India imported 1,050 tonnes of gold in 2021, the most in a decade, and far more than the 430 tonnes imported in 2020, the official said.
While global bullion prices drew support from the strong demand in India, the outlay on imports would have added to pressure on the country’s ailing rupee.
“Last year demand was robust as lots of weddings were postponed to 2021 from 2020 because of the coronavirus outbreak,” said a gold wholesaler.
Indian authorities imposed strict lockdowns during the first waves of the pandemic in 2020, hitting gold demand during the wedding season and key festivals such as Akshaya Tritiya when buying gold is considered auspicious. Gold is also regarded as an essential part of the bride’s dowry in India and is also a popular wedding gift.
A price correction had made gold more affordable for retail consumers in India early last year Local gold prices hit a record high of Rs 56,191 per 10 grams in August 2020 but fell back to Rs 43,320 per 10 gms in March 2021, when monthly imports spiked to a record 177 tonnes. In December 2021, India imported 86 tonnes of gold, slightly more than last year’s 84 tonnes, the government official said. Gold imports could moderate in January as rising coronavirus cases have prompted local authorities to impose restrictions. “Jewellers are afraid of impending lockdown. They have scaled down purchases,” a dealer said.